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Saturday, December 26, 2015

Top Ten Items of Tax Policy Interest for 2015 - #5

Continuing with my list of ten news items and activities from 2015 that I think have particular tax policy relevance.  Today, for my fifth item is the continuation of the Internet Tax Freedom Act. The 114th Congress has tied its extension to the budget and appropriations legislation. Thus, it now expires October 1, 2016 (per P.L. 114-113, 12/18/15). 

The Internet Tax Freedom Act was created in 1998 to help the Internet grow.  It prevents state and local governments from imposing tax on Internet access fees or having a discriminatory tax on the Internet. That's how Congress thought it could help the Internet grow. 

Well, it seems to me that the Internet has grown very nicely and has a profound relevance to businesses and our personal lives. Some of today's largest companies exist due to the Internet - Google, Uber, Airbnb, and many others.

I think it is unlikely that state and local governments are going to start taxing Internet access fees if the ITFA expires. Some might, but that should be their decision. Some states might if they believe it makes sense for their overall tax base.

I wrote an op ed for the Business Journal in 2007 questioning why we don't just let it expire (Let's say goodbye to the Internet tax moratorium  Silicon Valley/San Jose Business Journal, 8/10/07 and Portland Business Journal, 8/17/07). The arguments are the same today or really better given that the Internet has grown a lot since 2007.

What do you think? Should we let the ITFA expire, make it permanent or keep renewing it?  Why? 

My list so far of news and activities of 2015 with tax policy relevance (no ranking involved):
  1. Congress can alter our tax system via a lot of non-tax bills - here
  2. IRS funding challenges - here 
  3. Justice Kennedy called for a review of the 1992 Quill decision - here 
  4. IRS disagreeing with a court decision via a proposed regulation - here

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